CMS Pub. 100-08, ch. 4, § 4.16.1

Whoever knowingly and willfully solicits or receives any remuneration (including any

kickback, hospital incentive or bribe) directly or indirectly, overtly or covertly, in cash

or in kind, in return for referring a patient to a person for the furnishing or arranging for

the furnishing of any item or service for which payment may be made in whole or in part

under Medicare, Medicaid or a State health care program, or in return for purchasing,

leasing, or ordering, or arranging for or recommending purchasing, leasing, or ordering

any good, facility, service, or item for which payment may be made in whole or in part

under Medicare, Medicaid or a State health program, shall be guilty of a felony and upon

conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than

five years, or both. 42 U.S.C. 1320a-7b(b), §1128B(b) of the Act.

Discounts, rebates, or other reductions in price may violate the anti-kickback statute

because such arrangements induce the purchase of items or services payable by

Medicare or Medicaid. However, some arrangements are clearly permissible if they fall

within a safe harbor. One safe harbor protects certain discounting practices. For purposes

of this safe harbor, a “discount” is the reduction in the amount a seller charges a buyer

for a good or service based on an arms-length transaction. In addition, to be protected

under the discount safe harbor, the discount must apply to the original item or service

that is purchased or furnished (i.e., a discount cannot be applied to the purchase of a

different good or service than the one on which the discount was earned). The definition

of discount under the anti-kickback statute does not include “bundled” goods or services.

As a result, a discount may apply to the purchase of different goods or services other

than the one on which the discount was earned, when they are bundled together to

induce the purchase of that good or service without coming under the anti-kickback

statute.

Additionally, the discount offered for bundled goods or services to induce the purchase

of a different good or service would not come under the anti-kickback statute only when

both items are subject to the same reimbursement methodology under Medicare or

Medicaid. A “rebate” is defined as a discount that is not given at the time of sale. A

“buyer” is the individual or entity responsible for submitting a claim for the item or

service that is payable by the Medicare or Medicaid programs. If the buyer is an entity

that reports its costs on a cost report required by the Department or state health care

program, it must comply with all of the following standards:

The discount must be earned based on purchases of that same good or service

bought within a single fiscal year.

The buyer must claim the benefit of the discount in the fiscal year in which the

discount is earned or the following year.

The buyer must fully and accurately report the discount in the applicable cost

report.

The buyer must provide, upon request by the Secretary or a state agency,

information provided by the seller as specified in 42 CFR §1001.952 (h)(2)(ii)

of this section, or information provided by the offeror as specified in 42 CFR

§1001.952 (h)(3)(ii).

A “seller” is the individual or entity that offers the discount.